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Court of Appeals No. 08CA1677

La Plata County District Court No. 06CV180
Honorable Jeffrey Raymond Wilson, Judge

PurCo Fleet Services, Inc., a Utah corporation,

Plaintiff-Appellant and Cross-Appellee,


Judith Koenig,

Defendant-Appellee and Cross-Appellant.




Division III
Opinion by JUDGE TERRY
Dailey and Román, JJ., concur

Announced January 21, 2010


Van Cott, Bagley, Cornwall & McCarthy, Stephen K. Christiansen, Salt Lake
City Utah; Holland & Hart, LLP, Stephen G. Masciocchi, Denver, Colorado, for
Plaintiff-Appellant and Cross-Appellee

Spies, Powers & Robinson, P.C., Matthew M. McQuillan, Brendan O. Powers,

Denver, Colorado, for Defendant-Appellee and Cross-Appellant
This appeal gives rise to numerous issues that have not

previously been decided in Colorado in the context presented here.

We consider the requirements for proof of loss of use damages

where the damaged chattel was an automobile, customarily leased

out for profit by a car rental company. Next, we construe a contract

term granting the rental company the right to collect an

administrative charge in connection with the damaged car. Finally,

we determine whether the Colorado Fair Debt Collection Practices

Act (CFDCPA) applies to the attempt to collect loss of use damages

and the administrative charge under the circumstances of this case,

and whether attorney fees and costs may be awarded in connection

with the claim made under that Act.

PurCo Fleet Services, Inc. (PurCo) appeals the summary

judgment dismissing its breach of contract claims against Judith

Koenig. Koenig cross-appeals the summary judgment in PurCo’s

favor on her claims under the CFDCPA. We affirm in part, reverse

in part, and remand.

I. Background

Koenig went to the National Car Rental agency located at the

Durango Airport, where she rented a car and signed National’s

standard rental contract. While driving the car, she hit a deer,

damaging the vehicle. She then returned the damaged car to


PurCo is National’s assignee to collect claims on its behalf,

including the claim against Koenig here. PurCo’s agreement with

National allows PurCo to retain fifty percent of the money collected

for loss of use of the car and the entire administrative charge


Two weeks after the collision, PurCo demanded payment from

Koenig for physical damage to the car, loss of use of the car, and an

administrative charge. Koenig’s insurer paid on her behalf for the

damage to the car, but refused to pay PurCo for loss of use or the

administrative charge. PurCo filed suit to collect the unpaid

amounts. Koenig counterclaimed, alleging that PurCo’s collection

activities violated the CFDCPA.

The trial court granted Koenig’s motion for summary judgment

as to loss of use damages, on the basis that PurCo could not show

that, but for the damage to the car, National would have rented it to

another customer. The court also granted summary judgment for

Koenig on the claim for the administrative charge, reasoning that

the administrative charge provision of the rental agreement was an

invalid attempt to liquidate damages. However, summary judgment

was granted in PurCo’s favor on Koenig’s counterclaim under the


II. Loss of Use

PurCo contends the trial court erred in granting summary

judgment to Koenig on its claim for loss of use. We agree.

Contract interpretation is a question of law that is reviewed de

novo. Vu, Inc. v. Pacific Ocean Marketplace, Inc., 36 P.3d 165, 167

(Colo. App. 2001). To establish a claim for breach of contract, a

party must prove the existence of a contract, its relevant terms,

breach, and damages. Marquardt v. Perry, 200 P.3d 1126, 1129

(Colo. App. 2008). Summary judgment rejecting a breach of

contract claim is proper where the party claiming breach cannot

prove its damages arising therefrom. McCammon & Associates, Inc.

v. McGraw-Hill Broadcasting Co., 716 P.2d 490, 492 (Colo. App.

1986) (where special damages had to be proved and plaintiff failed

to prove such damages, summary judgment was properly entered).

The contract between Koenig and National contains the

following provision:

Loss or Damage to the Vehicle: [Koenig] will pay

[National] for all damage to or loss of the Vehicle, based on
repair cost or estimated repair cost, at [National’s] option,
diminished value of the Vehicle as determined by [National],
plus . . . [National’s] loss of use (regardless of fleet utilization)
and administrative charges, regardless of who is at fault.

(Emphasis added.)

Nowhere in the contract is an explanation given of the

meaning of “loss of use (regardless of fleet utilization).” Nor is any

explanation given as to the manner in which damages for loss of

use are to be calculated. The parties concede, and our research

confirms, that although this language appears in vehicle rental

contracts, the meaning of the phrase “loss of use (regardless of fleet

utilization)” has never been litigated in any reported decision.

Koenig argues that PurCo should not recover any amount of

damages, because it cannot prove that National incurred a loss.

Under the circumstances presented here, we conclude that the

requirement to prove an actual economic loss is altered by the “fleet

utilization” language in the contract, but that remand is necessary

for additional factual development as to whether National incurred

an actual, economic loss.

Our review of decisions from around the United States shows

there is no uniformity in the way loss of use damages are awarded.

Support can be found for a wide variety of approaches. See C.C.

Marvel, Annotation, Recovery for Loss of Use of Motor Vehicle

Damaged or Destroyed, 18 A.L.R.3d 497 (1968) (collecting cases).

Many courts that have awarded loss of use damages have

done so without discussing their rationale for awarding such

damages and the theory underlying the measure of damages. Thus,

many loss of use cases give little or no guidance as to which

measure of damages is appropriate in a given circumstance. Our

own Colorado jurisprudence is less than clear on these points.

Compare Hillman v. Bray Lines, Inc., 41 Colo. App. 493, 497, 591
P.2d 1332, 1336 (1978) (awarding reasonable rental rate for damage

to semi truck regardless of whether another truck was rented to

replace it), aff’d sub nom. Wise v. Hillman, 625 P.2d 364 (Colo.

1981), and Francis v. Steve Johnson Pontiac-GMC-Jeep, Inc., 724

P.2d 84, 85-86 (Colo. App. 1986) (awarding damages for cost to rent

replacement car where none was actually rented), with Airborne,

Inc. v. Denver Air Center, Inc., 832 P.2d 1086, 1090 (Colo. App.

1992) (net profits awarded for loss of use of commercial chattel).

To determine the appropriate framework for analyzing loss of

use damages here, we begin with a brief examination of the history

of loss of use theory as it relates to automobiles and commercial

chattels. This historical background informs our understanding of

the contract language employed here and aids in our determination

of the appropriate theory of damages to be applied. We then

address Koenig’s contention that PurCo may not recover for loss of

use unless it shows an actual loss (which we interpret to mean an

actual economic loss), and determine the effect of certain contract

language on that issue. We further examine the appropriate

measure of loss of use damages applicable in this case, assuming

that any may be awarded, and the propriety of the trial court’s

summary judgment against PurCo on its loss of use claim.

A. Loss of Use of Personal Automobiles

Under traditional damages theory, a party may not recover

special or consequential damages unless it proves that it has

sustained or will sustain a loss resulting from the other party’s

conduct. Dan B. Dobbs, Law of Remedies § 3.2, at 289 (2d ed.

1993); Francis, 724 P.2d at 85-86.

This theory has been applied in an unusual manner in the

context of loss of use of personal automobiles. Toward the

beginning of the Twentieth Century, as the family auto became less

of a luxurious rarity and more of a staple item, needed for transport

to the owner’s job, courts began to award loss of use damages to

automobile owners on the theory that there was intrinsic value in

the ability to have a car available for use. Alan E. Brownstein,

What’s the Use? A Doctrinal and Policy Critique of the Measurement

of Loss of Use Damages, 37 Rutgers L. Rev. 433, 492-95 (1985).

Under this intrinsic theory of loss, the existence of a loss of

some (unspecified) magnitude is presumed once the vehicle is

unavailable because it is being repaired. Courts latched onto the

cost of renting a replacement vehicle (lease-in rental value) as a

readily quantifiable damages measure. Thus, in numerous cases,

including in Colorado, the owner of a family auto was awarded

lease-in rental value as loss of use damages, even if no replacement

vehicle was actually rented. See Francis, 724 P.2d at 85-86; see

also Brownstein, 37 Rutgers L. Rev. at 493-95 nn.150-54 (collecting

cases). The theory for awarding such damages rested on the so-

called “egalitarian view,” a concept that a car owner who might not

be able to afford to rent a substitute should not be penalized for

that inability by being denied damages for the rental amount, where

a more wealthy owner who was able to rent a substitute might be

awarded that element of damages. See MCI WorldCom Network

Servs., Inc. v. Mastec, Inc., 370 F.3d 1074, 1078 (11th Cir. 2004).

In Francis, though the division stated that the plaintiff (a

private person) was required to prove an actual loss, it nevertheless

awarded the plaintiff loss of use damages for the cost to rent a

replacement car, even though none was actually rented. 724 P.2d

at 85-86. The holding of Francis appears to reflect the intrinsic loss

of use theory based on the egalitarian view.

Over time, the intrinsic loss of use theory gained traction

among American courts and commentators. This view is reflected

in the comments to Restatement (Second) of Torts sections 928 and

931 (1979), particularly comment b to section 931(a), which states:

The owner of the subject matter is entitled to recover as

damages for the loss of the value of the use, at least the rental
value of the chattel or land during the period of deprivation.
This is true even though the owner in fact has suffered no harm
through the deprivation, as when he was not using the subject
matter at the time or had a substitute that he used without
additional expense to him.

Restatement (Second) of Torts § 931 cmt. b (emphasis added); see

also Charles T. McCormick, Damages 474-76 (1935) (expressing

similar view).

While the principles articulated in the Restatement and

comment b have been applied in both personal and commercial

contexts, Colorado courts have not previously been called on to

decide whether those principles are appropriate in a commercial

context such as the one here. Because the vehicle here was used in

a commercial setting for the production of income, we turn our

attention to the damages principles to be applied to loss of use of

commercial chattels.

B. Loss of Use of Commercial Chattels

While the theory of intrinsic loss permeated decisions

concerning family cars, many courts declined to presume a loss

when the damaged item was a commercial chattel leased out to

others to produce income. Instead, they required that the plaintiff

demonstrate an actual, economic loss, rather than just a presumed,

intrinsic loss. See Brooklyn Eastern District Terminal v. United

States, 287 U.S. 170 (1932) (plaintiff needed to prove incurrence of

actual loss of the chattel, and no loss could be shown because

plaintiff had a substitute vessel that could be used in place of the

damaged ship); MCI WorldCom Network Servs., Inc. v. OSP

Consultants, Inc., 585 S.E.2d 540, 544 (Va. 2003) (no damages

awarded for loss of use of cable system because service was

rerouted to another part of that system); but see Koninklijke

Luchtvaart Maatschaapij, N.V. v. United Technologies Corp., 610

F.2d 1052, 1056-57 (2d Cir. 1979) (permitting recovery for loss of
use of aircraft where others in fleet were available, and no actual

financial loss was proved, based on theory of intrinsic value of right

to use chattel; distinguishing Brooklyn Terminal on grounds that it

was an admiralty case).

Thus, there is significant disagreement among case authorities

and commentators as to whether any economic loss, other than a

presumed intrinsic loss, needs to be shown to recover for loss of use

of commercial chattels.

We are persuaded by those authorities holding that, in the

context of commercial chattels, a plaintiff must demonstrate an

actual, economic loss rather than just an assumed intrinsic loss. It

could be questioned why the measure of damages should be

different in a commercial context rather than a private one. In our

view, the purpose of awarding loss of use damages in a commercial

setting is to compensate the plaintiff for the lost opportunity to earn

income from the chattel, Brownstein, 37 Rutgers L. Rev. at 479, a

consideration which is generally not present in the context of

personal chattels. See Joy v. Giglio, 254 P.2d 351, 352 (Okla. 1953)

(unlike the private owner of an auto, the owner who is in the

business of leasing it out derives no other usable value from it than

the profit realized by its rental); see also Dobbs, § 5.15(2), at 889-90

(noting that some litigants attempt to avoid necessity to prove

actual economic loss by inappropriately characterizing rental value

claims as general damages claims, when they are, in reality, special

damages claims for which actual realized losses must be shown);

Hunter v. Quaintance, 69 Colo. 28, 30, 168 P. 918, 919 (1917) (loss

of use damages are special damages); MCI WorldCom Network Servs.

v. Mastec, 370 F.3d at 1078 (noting party’s argument that there is

no justification for applying egalitarian theory of loss of use

damages in commercial context); AT & T Corp. v. Columbia Gulf

Transmission Co., 2008 WL 4585439, *3 (W.D. La. No. 07-1544,

Sept. 15, 2008) (magistrate’s unpublished report) (under Louisiana

law, damages are awarded for loss of use of personal car even where

no substitute is rented, on theory plaintiff suffered inconvenience

and mental anguish; no such rationale applies to corporations, as

“the only losses an entity that is designed to produce profits can

suffer are economic losses”) (citing Alexander v. Qwik Change Car

Ctr., Inc., 352 So. 2d 188 (La. 1977)).

Thus, we conclude that in order to recover damages for loss of

use of a commercial chattel that is normally rented out for profit, its

owner must demonstrate that it lost the opportunity to earn income

from the chattel.

Because parties are free to contract away certain rights they

would otherwise have, see Krystkowiak v. W.O. Brisben Cos., 90

P.3d 859, 865 (Colo. 2004) (agreement not to exercise First

Amendment rights), we presume that parties may, by contract,

modify or eliminate the need to show such an actual, economic loss.

PurCo here, in essence, argues that certain contract language

eliminates any requirement that it prove such a loss. We turn,

then, to consideration of that language.

C. Effect of “Regardless of Fleet Utilization” Language on

Requirement to Prove a Loss

The contract here states that Koenig is required to pay

National’s damages for loss of use “regardless of fleet utilization.”

PurCo argues that this language eliminates the requirement to

prove any sort of actual, economic loss. While we conclude this

language alters the requirement to prove actual, economic loss, it

does not eliminate it entirely.

We follow the rules of construction of contract terms. Thus,

the words used should be given their plain meanings according to

common usage. State Farm Mut. Auto. Ins. Co. v. Stein, 924 P.2d

1154, 1156 (Colo. App. 1996), aff’d, 940 P.2d 384 (Colo. 1997).

Here, the meaning of the individual words is not hard to

discern. How those words apply in the situation presented,

however, is not plain or obvious. The parties have not provided any

information about the drafting history of this language, and our

research has revealed no cases where this language has been

previously construed. Our construction of this unusual contract

language is informed by legal precedents concerning loss of use

where other vessels or vehicles in a fleet were available to substitute

for the damaged chattel.

In many of the most often cited commercial cases involving

fleets of ships and buses, courts declined to award damages where

the damaged party was able to utilize another chattel from its fleet

in place of the damaged chattel. See, e.g., Brooklyn Terminal, 287

U.S. 170 (spare ship); Mountain View Coach Lines, Inc. v. Hartnett,

415 N.Y.S.2d 918 (N.Y. Green County Ct. 1978) (spare buses), aff’d,

414 N.Y.S.2d 947 (N.Y. App. Div. 1979), declined to follow by

Mountain View Coach Lines, Inc. v. Storms, 476 N.Y.S.2d 918 (N.Y.

App. Div. 1984); see also CTI Int’l, Inc. v. Lloyds Underwriters, 735

F.2d 679 (2d Cir. 1984) (upholding judgment against shipping

container company where it could not show it sustained loss of use

damages because other containers were available to be used in

place of the lost containers).

Given this background, the most reasonable interpretation of

the “regardless of fleet utilization” language in National’s rental

contract is that it is intended to avoid the rule adopted in fleet cases

such as Brooklyn Terminal, where courts denied loss of use

damages because the plaintiff was able to substitute another

chattel in its fleet. Thus, we construe the phrase “regardless of fleet

utilization” in this contract to mean that National will not be denied

loss of use damages just because it might have been able to

substitute one of its other rental cars for the damaged car. We are

therefore required to presume that National incurred some type of

loss by the unavailability of this particular car during the period

reasonably necessary for repairs. We are also prevented from

concluding that National incurred no damages on the sole basis

that there may have been other vehicles that could have been

rented in place of this car.

Nevertheless, we conclude this contract language does not

completely eliminate the need for the owner of a commercial chattel

to prove it lost the opportunity to earn a profit from the chattel as a

result of the defendant’s actions. Thus, PurCo is required to show

that National lost the opportunity to earn income here, by showing

certain elements of evidence, which we label “loss prerequisites.”

Those prerequisites are that for each day for which recovery is

sought (1) the rental agency location from which this car was rented

was open for business (or, if it was not actually open, made cars

available to rent on those days); and (2) there was at least one

customer who desired to rent a vehicle (even if not necessarily this

vehicle) to be used on that day. If these loss prerequisites are not

met, then there could have been no lost opportunity to make a

profit from this car, even absent Koenig’s conduct, and National
(and therefore PurCo) would have incurred no damage. See Nunn v.

Mid-Century Insurance Co., 215 P.3d 1196, 1202 (Colo. App. 2008)

(to recover in claim against alleged tortfeasor, plaintiff must prove

actual damages were proximately caused by tortfeasor’s violation of


Because PurCo did not have the benefit of our opinion to know

of the requirement we announce today to show loss prerequisites,

we remand the matter to the trial court to allow PurCo the

opportunity to do so, if it can. See Catholic Health Initiatives

Colorado v. City of Pueblo, 207 P.3d 812, 826 (Colo. 2009)

(remanding to give parties opportunity to raise issues and present

additional evidence given new rule announced by supreme court).

If PurCo cannot present evidence of the loss prerequisites, then the

trial court shall enter judgment against it on its loss of use claim. If

it is able to do so, however, the trial court shall allow the claim to go

forward, and apply the following principles for awarding loss of use


D. The Measure of Loss of Use Damages

Authorities and commentators have generally adopted interest

or rental value as the possible measures of damages for loss of use,

and failing proof of either, an award of nominal damages. See

Restatement (Second) of Contracts § 348(1) (1981) (discussing

interest or rental value); Dobbs, § 5.15(2), at 883-84 (discussing

interest); Am. Tel. & Tel. Co. v. Connecticut Light & Power Co., 470 F.

Supp. 105, 109 (D. Conn. 1979) (nominal damages ruled

appropriate where plaintiff introduced insufficient evidence from

which to calculate loss of use damages). As between rental value

and interest, the latter is less often discussed, and probably easier

to calculate in a legally appropriate fashion. See Brownstein, 37

Rutgers L. Rev. at 508 (interest calculated by determining fair

market value of chattel, applying an interest rate, such as statutory

rate, to that value for period when chattel is reasonably undergoing

repairs, and awarding that interest amount to the damaged party),

535-36 (benefits of awarding interest as measure of loss of use

damages include ease of calculation, reduction of litigation, and

promotion of settlement).
Because the parties here have argued solely about the

appropriateness of rental value as a measure of damages, we do not

consider these other damages measures. However, we see nothing

to preclude the parties from arguing their merits on remand.

Numerous courts and commentators have stated that an

appropriate measure of loss of use damages is “rental value.” See

Dobbs, § 5.15(2), at 882-83. However, courts have often been

unclear about whether the injured party is to be awarded lease-in

rental value (the cost of renting a substitute for the damaged

chattel) or lease-out rental value (damages to compensate for the

lost opportunity to lease the owner’s chattel to a third party), and

the rationale behind awarding such damages. Brownstein, 37

Rutgers L. Rev. at 447-75.

Here, it is undisputed that National did not need to lease in a

replacement vehicle, and PurCo is not seeking the cost of doing so.

Rather, PurCo seeks to recover the gross daily rental rate that

National would have been able to charge for leasing out the

damaged vehicle during the period reasonably necessary for repairs.

We conclude that lease-out gross rental value is not the appropriate

measure of damages in this circumstance.

Where the damaged party’s business is the leasing out of its

chattel in a profit-making enterprise, and damages are sought for

lost rental value, we agree with those authorities indicating that the

more appropriate measure of damages is the net profit the owner

would have received, had it been able to lease out the damaged

chattel during the time reasonably needed for repairs, less any

expenses saved by the unavailability of the chattel. See United

Truck Rental Equip. Leasing, Inc. v. Kleenco Corp., 929 P.2d 99, 111

(Haw. Ct. App. 1996); Dobbs, § 5.15(2), at 888 (“Perhaps [such a]

rule would apply to claims by plaintiffs who are essentially in the

business of leasing out the chattels in question rather than in

business[es] that merely use the chattel. A set of rules of this kind

would bring the lost use recovery in chattel cases into line with

traditional (but not invariable) understandings of damages law.”);

Brownstein, 37 Rutgers L. Rev. at 451, 509 & n.195.

The commentator who has made the most extensive study of

loss of use theory, Professor Alan Brownstein, has noted the policy
interests in making sure the chattel owner is adequately

compensated for its loss, while attempting to ensure that it does not

receive a windfall. Brownstein, 37 Rutgers L. Rev. at 451; see also

MCI WorldCom Network Services, Inc. v. Mastec, Inc., 995 So. 2d

221, 224 (Fla. 2008) (purpose of loss of use damages is to

compensate, not to punish defendants or bestow a windfall on

plaintiffs). Different measures of damages are appropriate in

different circumstances, and Professor Brownstein stressed that

damages rules need to be flexible enough to meet a wide variety of

factual scenarios. Brownstein, 37 Rutgers L. Rev. at 507-08 (noting

that “[n]ot much is accomplished by asserting ill-defined concepts

such as rental value and expecting them to operate as talismans to

provide accurate compensation to plaintiffs”).

According to Professor Brownstein, awarding gross rental

value of the damaged chattel to its owner would overcompensate for

the loss of its use:

Since rent can only be earned by subjecting a chattel to wear

and tear and other forms of depreciation, the plaintiff
theoretically receives a windfall by saving these expenses if
awarded gross rental income. Therefore, depreciation costs

must be deducted from projected rental income to establish
the net usable value of which the owner has been deprived.

37 Rutgers L. Rev. at 451; see also Am. Tel. & Tel. Co. v. Connecticut

Light & Power Co., 470 F. Supp. at 109. While Professor

Brownstein notes that gross lease-out rental value has been

accepted by many courts, perhaps because its computational

simplicity is appealing, that measure of damages

lacks any principled justification. . . . In situations where

lease-out rental value did not represent an actual lost
opportunity, [its calculation] was also likely to produce a
result that bore no relationship to the injury actually
sustained by the plaintiff.

37 Rutgers L. Rev. at 462-63.

In addition to whether gross lease-out rental value is

appropriate, another issue arises as to whether gross short-term or

long-term rental rates should be awarded. Awarding the gross

short-term lease-out rental rate of the chattel – apparently the rate

sought to be recovered by PurCo here – may also overcompensate a

plaintiff. As Professor Brownstein noted,

short-term rental rates are extremely high; they are based not
only on the general value of the chattel’s use to the public, but
also on the expenses inherent in making chattels available on
demand for limited periods. Short-term rates often constitute
many times the cost to the plaintiff of the use of the “lost”
chattel, if that use value is computed by dividing the purchase
price of the chattel over its useful life and factoring in interest.

Id. at 473.

Rather than awarding a gross rental amount to a plaintiff,

Professor Brownstein recommends the following:

If lease-out rental value is to measure accurately actual lost

opportunity costs, the plaintiff should only recover the net
rental value of its chattel. The theory requires the deduction
from rental value awards of operating costs, depreciation, and
other expenses which would have been incurred even if the
accident had not happened and the plaintiff actually had
operated the chattel itself or rented it out to a third party.

Id. at 479 (emphasis in original) (footnote omitted).

This view finds support in Dobbs, Law of Remedies, §5.15(2),

at 888. Comment b to the Restatement (Second) of Contracts

section 348(1) also appears to reflect this view. It states:

Breach that delays the use of property. If the breach is

one that prevents for a period of time the use of property from
which profits would have been made, the loss in value to the
injured party is based on the profits that he would have made
during that period. If those profits cannot be proved with
reasonable certainty (§ 352), . . . [recovery is also possible if] the
fair rental value of the property during the period of delay [is
proved]. Damages based on fair rental value include an
element of profit since the fair rental value of property depends
on what it would command on the market and this turns on
the profit that would be derived from its use. For this reason,
uncertainty as to profits may result in uncertainty in fair
rental value.

(Emphasis added.)

We understand the exception in comment b (emphasized

above) for inability to prove damages with certainty to apply in a

context such as that discussed in Denver Building & Construction

Trades Council v. Shore, 132 Colo. 187, 197-99, 287 P.2d 267, 272-

73 (1955). There, a union strike by operators of certain heavy

machines prevented use of those machines in the construction of a

bridge. The employer, which had a contract with the state highway

department to build the bridge, ultimately was able to complete the

project and make a profit. The court held that there was no way to

allocate to any particular machine, whose use was lost because of

the strike, any proportion of the overall profit that could have been

made on the project, and thus it was not feasible to measure

damages based on lost profits. Therefore, it upheld the trial court’s

award of rental value of the affected machines to compensate for

their loss of use. Id. In such a circumstance, it would clearly be

appropriate for the damaged party to recover the full lease-in rental

cost of a replacement chattel.

We do not believe the exception in comment b applies in a

circumstance where the chattel owner is in the business of leasing

out its chattel for a profit, as National was here. Where damages

based on lease-out rental value in a commercial enterprise are

sought, lost profit can usually be calculated with relative ease and

certainty, such as the profit that could have been realized by a

rental car company from the lost ability to rent out the damaged

vehicle to a consumer. In such a circumstance, lost profits less

expenses saved is an appropriate measure of damages.

This is the approach to damages taken in Airborne, Inc. v.

Denver Air Center, Inc., 832 P.2d at 1090 (awarding net lost profits

in action for breach of contract and tort claims arising from damage

to airplane). Courts in other jurisdictions have also adopted this

approach, most notably in the telephone cable context. See Am.

Tel. & Tel. Co. v. Connecticut Light, 470 F. Supp. at 109.

We are persuaded by Professor Brownstein’s demonstration

that, in the commercial context, any damages award greater than

this measure of damages is likely to overcompensate the plaintiff for

its loss. While we recognize the significant variety in the methods

employed by courts throughout the nation in calculating loss of use

damages, see 18 A.L.R.3d 497, we conclude that where, as here, the

plaintiff is in the business of renting out the chattel for the purpose

of earning a profit, and seeks damages based on lease-out rental

value, the appropriate measure of damages is the net profit it would

have received from rental of the chattel during the time period

reasonably needed for repairs, less any expenses saved.

E. Propriety of Summary Judgment Against PurCo on Loss of

Use Claim

We conclude the trial court erred in granting summary

judgment against PurCo on its loss of use claim.

Summary judgment is only appropriate where no genuine

issue of material fact exists. Boone v. Bd. of County Comm’rs, 107

P.3d 1114, 1116 (Colo. App. 2004).

As we have stated, lost profits less expenses saved is one of

the appropriate measures of damages that could be awarded to

PurCo for loss of use. The record shows that PurCo did not present

evidence of the amount of lost profits it would have earned had the

vehicle been available to rent. Nevertheless, PurCo presented

evidence from which an appropriate measure of damages could

have been derived, and thus summary judgment should not have

been awarded against it.

PurCo submitted proof of the gross daily lease-out rental rate

it charged Koenig, and argued it should recover that same amount

for each day during which the car was reasonably out of service for

repairs. Koenig did not dispute that proof, but rather argued that

the measure of damages represented by the rental rate was

inappropriate. Although the gross lease-out rental rate was not the

appropriate measure of damages to be awarded, as we have noted,

it nevertheless is a relevant number from which appropriate

damages could potentially be derived. See Am. Tel. & Tel. Co. v.

Connecticut Light, 470 F. Supp. at 109 (market rental value is an

appropriate starting point for determining loss of use damages,

although “rental value will not furnish the measure of damages for

loss of use” (quoting Hawkins v. Garford Trucking Co., 114 A. 94,

95 (Conn. 1921))). Because PurCo submitted some relevant

evidence of its loss of use damages, it was error for the trial court to

grant summary judgment against PurCo on its loss of use claim.

While it is unclear from the record whether PurCo will be able to

prove an appropriate measure of damages in accordance with our

ruling, on remand, PurCo shall be permitted to submit additional

evidence concerning the loss prerequisites and its loss of use


III. Administrative Charges

PurCo contends the trial court erred in granting summary

judgment to Koenig concerning its claim for administrative charges.

We agree.

As pertinent here, the administrative charges portion of the

contract states:

Loss or Damage to the Vehicle: [Koenig] will pay

[National] for . . . administrative charges, regardless of who is
at fault.

(Emphasis added.) Enforcing this language as written would permit

PurCo to recover an administrative charge. We disagree with the

trial court’s conclusion that the administrative charge provision

reflects a failed attempt to collect liquidated damages. None of the

language typically associated with liquidated damages appears in

this provision. See, e.g., Powder Horn Constructors, Inc. v. City of

Florence, 754 P.2d 356, 365-66 (Colo. 1988).

PurCo argues that the administrative charge is to compensate

the rental agency for the expenses incurred in processing a damage

claim. No manner of calculating such charges is specified in the

contract. PurCo states that it calculated the administrative charge

for the Koenig vehicle by consulting a schedule that calculates the

administrative charge based on the amount of physical damage to

the vehicle. However, no evidence was presented that the schedule

was made part of the rental contract, or provided to Koenig at the

time she entered into the contract with National.

PurCo has cited legislation from other states that set limits on

administrative charges that may be collected by companies in

PurCo’s position, based on similar rental contracts. Ind. Code §§

24-4-9-13(9) & 24-4-9-14(c) (limiting administrative charge to 10%

of first $1,500 in physical damage); Cal. Civ. Code § 1936(b)(6),

(c)(6) (limiting administrative charge to no more than $150 based on

sliding scale of physical damages); Nev. Rev. Stat. §§

482.31535(1)(h), 482.3154(3) (same). No such legislation exists in

Colorado, and we decline to contrive a blanket judicial resolution of

such an issue. The parties would be better served by bringing this

issue to the attention of the General Assembly. See Scoggins v.

Unigard Ins. Co., 869 P.2d 202, 205 (Colo. 1994) (Colorado courts

do not engage in judicial legislation).

We also disagree with PurCo’s contention that the trial court

should have supplied the contract term that was missing here,

namely the amount of the administrative fee that would be charged.

It has cited no authority, and we have found none, that would allow

a court to supply a contract term defining the measure of such an

element of damages in the event of contract breach. In any event, it

is clear from the record that the parties never agreed on any

manner in which such damages could be calculated, and under

such circumstances, it would not be appropriate for the court to

supply such a missing term, other than to determine that the fee

should be “reasonable.” See, e.g., Bloom v. Nat’l Collegiate Athletic

Ass’n, 93 P.3d 621, 624 (Colo. App. 2004) (citing, with approval,

various authorities for the proposition that the duty of good faith
and fair dealing implied in every contract requires that a party

vested with contractual discretion exercise that discretion

reasonably, not arbitrarily, capriciously, or in a manner

inconsistent with the reasonable expectations of the parties); cf.

Villa Sierra Condominium Ass’n v. Field Corp., 878 P.2d 161, 168

(Colo. App. 1994) (it is improper for a court to imply a contract term

that amounts to “engraft[ing] upon the agreement a provision not

agreed to by the parties”).

PurCo attempted to collect a $150 administrative charge from

Koenig, and submitted evidence that it had calculated the charge

based on a schedule that was not part of the contract. We conclude

this constituted some evidence from which the finder of fact could

award PurCo an amount for the administrative charge, and thus we

reverse the summary judgment entered against PurCo with respect

to that fee. The finder of fact may award damages for the fee based

on a reasonable sum, to be determined by the fact finder. Lazy Dog

Ranch v. Telluray Ranch Corp., 965 P.2d 1229, 1241 (Colo. 1998)

(determination of reasonableness is largely a question of fact).

IV. Collection Agency Under CFDCPA

Koenig filed a counterclaim against PurCo under section 12-

14-113, C.R.S. 2009, which provides for civil liability if a collection

agency violates the CFDCPA. She contends on cross-appeal that

PurCo is an unlicensed collection agency whose collection activities

are governed by the CFDCPA, and thus the trial court was without

jurisdiction to consider PurCo’s collection action against her. We


We review issues of statutory construction de novo. Flood v.

Mercantile Adjustment Bureau, LLC, 176 P.3d 769, 773 (Colo. 2008).

Our primary responsibility is to effectuate the General Assembly’s

intent. Id. We construe a statute as a whole, giving consistent,

harmonious, and sensible effect to all of its parts, and we will not

adopt an interpretation that leads to illogical or absurd results.

Id.; see also Colo. Water Conservation Bd. v. Upper Gunnison River

Water Conservancy Dist., 109 P.3d 585, 593 (Colo. 2005).

The CFDCPA applies to any collection agency that collects or

attempts to collect from consumers who reside within this state for

a creditor with a place of business located within this state. § 12-

14-102(1)(b), C.R.S. 2009. Under the CFDCPA, it is unlawful for

any person or entity to operate as a collection agency without

obtaining a valid license that is issued in accordance with the

CFDCPA. §§ 12-14-115(1)(a), 12-14-118, C.R.S. 2009. Colorado

law precludes unlicensed debt collection agencies from filing any

lawsuit to collect a debt. Commercial Serv. of Perry, Inc. v.

Fitzgerald, 856 P.2d 58, 62 (Colo. App. 1993).

The CFDCPA defines a collection agency in relevant part as a

person who (1) “[r]egularly collects or attempts to collect, directly or

indirectly, debts owed or due or asserted to be owed or due

another”; or (2) “[t]akes assignment of debts for collection

purposes.” § 12-14-103(2)(a)(II)(A)-(B), C.R.S. 2009. A debt is

defined as an “obligation or alleged obligation of a consumer to pay

money arising out of a transaction, whether or not such obligation

has been reduced to judgment.” Section 12-14-103(6)(a), C.R.S.


Under the CFDCPA, a collection agency does not include “[a]ny

person collecting or attempting to collect any debt owed or due or

asserted to be owed or due another to the extent that . . . [s]uch

activity concerns a debt which was not in default at the time it was

obtained by such person.” Section 12-14-103(2)(b)(VII)(C), C.R.S.

2009. A company taking assignments of debt not in default is not

required to obtain a license, although it is subject to the other

provisions of the CFDCPA. Commercial. Serv. of Perry, Inc., 856

P.2d at 62; see also Wadlington v. Credit Acceptance Corp., 76 F.3d

103, 106-07 (6th Cir. 1996) (under similar federal statute, holding

that company that received assignment of retail installment sales

contracts before they went into default was not a debt collector).

Here, PurCo falls within the exemption found in section 12-14-

103(2)(b)(VII)(C) because at the time National assigned the debt to

PurCo, the debt was not in default. The only evidence of

assignment appearing in the record is a 1998 contract, assigning

from National to PurCo all of its claims, rights, or causes of action

relating to claims for damage to motor vehicles. Given that this

contract predates Koenig’s car rental, let alone the damage to the

car, by nearly seven years, it is safe to say that the debt was

assigned before it went into default. Cf. § 4-9-204(a) & official

comments 2, 6, C.R.S. 2009 (validating conveyances of security

interests in after-acquired property and receivables); Frederick L.

Clark, The Assignment of Unearned Book Accounts, 75 U. Pa. L. Rev.

695, 689-90 (1926-1927) (assignments of unearned book accounts


Because of our conclusion, we need not address Koenig’s

contentions that the debt was in default even before any demand for

payment was made on her and that PurCo identified itself as a debt


V. Attorney Fees and Costs for CFDCPA Claim

PurCo next argues that the trial court erred in declining to

award its attorney fees and costs incurred in defending against

Koenig’s counterclaim under the CFDCPA. Koenig contends PurCo

is not entitled to recover costs or attorney fees because her CFDCPA

counterclaim is not an “action” within the meaning of section 12-

14-113(1.5), C.R.S. 2009. We agree with PurCo.

Section 12-14-113(1.5) provides:

In the case of any unsuccessful action brought under section

[12-14-113], the plaintiff shall be liable to each defendant in
an amount equal to that defendant’s cost incurred in
defending the action, together with such reasonable attorney
fees as may be determined by the court.
(Emphasis added.) See also 15 U.S.C. § 1692k(a)(3) (similar federal


The CFDCPA does not define the term “action.” However, we

see no reason to create a separate rule for the award of attorney

fees and costs based on the fortuity of whether the CFDCPA claim

was raised as an initial claim or a counterclaim. Both claims and

counterclaims, if proved, entitle the party raising them to

affirmative relief. We construe the term “action” in section 12-14-

113(1.5) to include both claims and counterclaims brought under

section 12-14-113 in a judicial proceeding. See Levitt Multihousing

Corp. v. District Court, 188 Colo. 360, 364, 534 P.2d 1207, 1209

(1975) (“A counterclaim is just as much an affirmative action as is

an original complaint . . . .”); see also § 4-1-201(b)(1), C.R.S. 2009

(defining “action” in Uniform Commercial Code to include

counterclaims); C.R.C.P. 41(a)(2) (a plaintiff, by dismissing its own

claims under C.R.C.P. 41(a)(1), is not permitted to dismiss

counterclaim that can be independently adjudicated; in essence,

treating such a counterclaim as a separable “action”).

Because Koenig brought an unsuccessful counterclaim against

PurCo, the statute entitles PurCo to recover its costs and

reasonable attorney fees incurred in defending against that

counterclaim. Thus, we reverse the trial court’s denial of an award

of costs and attorney fees to PurCo on the counterclaim and

remand for a determination of such an award.

VI. Costs Awarded to the Prevailing Party

PurCo next argues the trial court’s cost award to Koenig based

on the determination that she was the prevailing party constitutes

error and should be reversed. Except as noted above concerning

attorney fees and costs under the CFDCPA, any award of costs on a

prevailing party theory based on other claims is premature, in light

of our disposition on the merits. We therefore reverse the trial

court’s award of fees and costs to Koenig. On remand, the trial

court shall determine the merits of the claims that remain, and

reconsider its prevailing party determination and resulting costs

award. See Archer v. Farmer Bros. Co., 70 P.3d 495, 501 (Colo. App.

2002), aff’d, 90 P.3d 228 (Colo. 2004).

VII. Attorney Fees on Appeal

PurCo requests its attorney fees incurred in this appeal, and

at a minimum, the fees incurred appealing the trial court’s ruling

awarding Koenig fees and costs on the unsuccessful CFDCPA claim

and denying them to PurCo. We agree that PurCo is entitled to its

attorney fees incurred (1) in appealing that portion of the trial

court’s ruling awarding Koenig fees and costs and denying them to

PurCo for defending against Koenig’s unsuccessful CFDCPA claim,

and (2) in contesting Koenig’s cross-appeal of dismissal of that

claim. Therefore, on remand the trial court shall determine and

award the amount of PurCo’s reasonable appellate attorney fees

incurred with respect to these issues.

The summary judgment entered against PurCo on its claims

for loss of use and administrative charges is reversed, as is the

award of costs and attorney fees, and the case is remanded to the

trial court for further proceedings in accordance with this opinion.

In all other respects, the judgment is affirmed.